A few thoughts from our friend Dr. Tom Krannawitter
Probably most people don’t equate “Shark Tank” with sappy, emotional TV drama. But as I watched an episode this evening, while gobbling down a late dinner of cold hot dogs, I found myself almost crying like a baby.
A decent enough fella came into the Shark Tank with a clever idea: a collapsible freight rack for pickup beds useful for anyone who uses their truck for work purposes during the day — hauling large pieces of lumber, or ladders, or anything too big to fit within the pickup bed — and for personal purposes other times.
He’s from a small town in North Carolina that has been economically devastated by the departure of several large manufacturing companies. People there are turning to all kinds of bad things just in an effort to survive. And this fella is resolved to make, market, and sell his products from his hometown. He badly wants to provide jobs for the friends and neighbors he knows and cares about. He presented himself as a patriotic man of deep religious faith, and he thinks this is some kind of calling for him. And who am I or anyone else to judge his intentions? He seemed perfectly earnest and his heart appears to be in just the right place.
Here’s the rub: His product is an add-on for truck and truck parts sellers. By manufacturing in the U.S., he cannot get his wholesale price point low enough to be picked up by the kinds of distributors who could get this innovative product in front of the kinds of customers who want to buy it. Those distributors, and the Sharks, want him to move the manufacturing piece of his business overseas, where it can be done much cheaper than here in the U.S. But he won’t budge. He seems to feel that he would be betraying his fellow citizens and his country by such a move.
Now, set aside what the best business decision might be in this particular situation. Let us ask: Why is this decision being forced upon him and his potential investors? We have in America the most able, skilled, energetic and creative labor force the world has ever seen. Why cannot we Americans produce a quality collapsible freight rack for pickup trucks at a price competitive with overseas manufacturing?
There’s one and only one answer: Government regulations — dictating by force what others will do, how they will do it, and what they will not do, with their own property — increase the costs of doing anything or making anything in the United States so that it cannot be competitive with other parts of the world where people are free to do things and make things more efficiently. That’s it. Foreign labor and foreign manufacturing facilities have no magic that makes them better. They just don’t have the regulatory restrictions on entrepreneurial efforts that we do.
So the business this man is trying to build in small town North Carolina might very well evaporate and become nothing. And that will mean no new jobs and no new wealth creation for the friends and neighbors this man is trying to help. It breaks my heart.
While some might denounce him as an un-savvy businessman, the real blame should be directed at the regulatory leviathan Americans have allowed to be assembled right in front of their eyes, all in the name of supposedly protecting the poor and those working and those out of work from the alleged evils of businesses. It’s shameful. It’s embarrassing that we use the force of our own government to make it almost impossible for an American to start a new business.
If we continue down this path, we should say farewell to the days of prosperity and the opportunity to improve one’s life by one’s own hard work. Because those days appear to be fleeting. And many among us actually think that is a good thing. They call it “social justice.” But it is the opposite. It is injustice. Gross injustice.
Should the unemployed in that rural North Carolina town — none of whom will be working in this man’s manufacturing plant for wages above or below the “minimum wage” or in compliance with or violation of any other regulations because he likely will never build a manufacturing plant and he will offer no jobs at all for anyone — turn to cooking meth, for example, for a quick profit, will anyone be surprised? Will anyone think that’s good, because at least they’re not subject to the allegedly evil machinations of a “business?” I won’t, that’s for sure.
I recall this episode of the Shark Tank from 2012. As it happens, Donny McCall, the inventor, was able to find an American manufacturer. He wasn’t able to stay in North Carolina. Instead, he had to move his manufacturing to Iowa. Recent reports, suggest that McCall is doing well and making his dream come true. But don’t miss the point. McCall benefited from huge publicity from a popular television program. Reading viewer comments, one sees a lot of people promising to purchase McCall’s product not based on its value to them, but based on their sympathy with his story. That is not a promising business case. At any rate, McCall’s journey would be made much easier if there were fewer government hoops through which he had to leap. That is the elephant in the room that all of the Sharks skirted around. Increased regulation doesn’t kill business growth, it retards it; slows it. And who most benefits from the slowing of new players in the market? Every small entrepreneur will not be as fortunate as to have their product publicized on national television. Others will wither and die, or take the advice of sharks and move their business overseas.